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January 3, 2000

Ms. Karen J. Walker
Chief, Redemption Management Branch
U.S. Department of Agriculture
3101 Park Center Drive
Alexandria, Virginia 22302

RE: Proposal To Amend Retailer Application Processing Rules

Dear Ms. Walker,

The Food Marketing Institute (FMI) is pleased to provide the following comments on the U.S. Department of Agriculture's (USDA's) proposal to amend the retailer application processing rules for the Food Stamp Program (FSP). 64 Fed. Reg. 59665 (Nov. 3, 1999). In brief, the proposal would extend the application processing timeframe from 30 days to 45 days for the stated purpose of allowing FSP officials adequate time to schedule and conduct an on-site visit if necessary. The proposal would additionally modify the rules to specify the information - including tax records - that retailers may be required to provide and to require retailers to sign an authorization to allow FNS to verify the documents with appropriate sources. Several of these requirements were imposed by the Personal Responsibility and Wok Opportunity Reconciliation Act.

As explained more fully below, in those cases in which an on-site visit is not required, USDA should continue to complete the authorization process within 30 days. Moreover, the paperwork burden should be minimized to the greatest extent possible. Toward this end, USDA should consider membership in professional organizations as an indicator of legitimacy.

FMI is a non-profit association that conducts programs in research, education, industry relations and public affairs on behalf of its 1,500 members and their subsidiaries. Our membership includes food retailers and wholesalers, as well as their customers, in the United States and around the world. FMI's domestic member companies operate approximately 21,000 retail food stores with a combined annual sales volume of $220 billion, which accounts for more than half of all grocery sales in the United States. FMI's retail membership is composed of large multi-store chains, small regional firms, and independent supermarkets. Our international membership includes 200 members from 60 countries.

A. Application Timeframe Should Not Be Extended If On-Site Visit Unnecessary

Section 278.1 of the FSP regulations requires an official to deny, approve, or request more information from a retailer within 30 days of receipt of the firm's application to serve FSP benefit recipients. 7 C.F.R. § 278.1(a). The preamble to the proposal states that, "[I]n most instances, the current rule is adequate to ensure the eligibility of a firm." 64 Fed. Reg. at 59667. The timeframe becomes "problematic, however, when the field office is not familiar with the store, or needs more information about the firm's qualifications to determine whether it is a legitimate retail food store." Id.

To address this concern, the proposed rule would provide USDA Field Offices with 45 days to process completed applications and to make any needed store visits. The Agency argues that, "[T]he 45-day period following the receipt of a completed application is necessary to allow additional time to effectively plan and carry out these on-site visits, and to allow the field office to make a determination as to whether the firm qualifies for authorization." Id. at 59668. In the "interests of efficiency and the responsible use of resources, on-site visits must be carefully planned and clustered in geographic areas." Id. at 59668.

Although it may be necessary for USDA to lengthen the application review timeframe in some cases to accommodate on-site visits, no on-site visit should be necessary for reputable retailers that are well-known and familiar to the Agency. Therefore, USDA should be able to complete the application review within the current 30-day period for retailers that are known to the Agency to be reputable. Accordingly, immediately upon receipt of an application, USDA should make a determination as to whether or not an on-site visit will be necessary. This will allow the Agency to plan and cluster site visits according to geographic areas most efficiently, thereby using the Agency's resources responsibly. Continuing to authorize well-known, reputable retailers within the current 30 day timeframe will ensure that FSP recipients have the broadest selection of retailers as quickly as possible.

B. USDA Should Consider Trade Association Memberships as Indicia of Professionalism

The proposed rule specifies several types of documentation that the Agency intends to consider to determine whether a firm is a bona fide food retailer. In addition, USDA should consider adding memberships in any of the various state or national trade associations for food retailers as indicia of professionalism. Trade associations help to ensure that their members are apprised of various regulatory developments, and the fraternization among members helps to reduce the likelihood that an illegitimate retailer would become a member. Moreover, association membership itself often requires that a retailer has achieved a certain level of professionalism, such as a particular sales volume. As membership is voluntary, illegitimate businesses are unlikely to choose to pay a membership fee to participate.

Observations and suggestions along these lines were made during a "listening session" on authorization procedures that USDA held approximately one year ago, and our members asked that we re-propose the issue during the Agency's current reconsideration of the regulations.

We appreciate the opportunity to provide you with our comments regarding the proposed amendments to the retailer authorization procedures. Please let us know if we may provide any further information.

Sincerely,

Tim Hammonds
President and CEO